For lessons in bribery, Gome tycoon offers master class

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If anyone were to write about the craft of bribery on the mainland, self-made billionaire Wong Kwong-yu is probably the most qualified.

Through bribes, he got billions of yuan in loans to build his empire in the early 1990s, listed Gome Electrical Appliances Holding in Hong Kong in 2004, and acquired a rival in 2006 to make Gome the second-largest appliance chain in the country.

Using bribes, he averted a government probe into illegal loans and another investigation into tax evasion. But Wong, known on the mainland as Huang Guangyu, is now in jail and it will be some time before he can share his know-how with us.

Fortunately, the mainland's Century Weekly magazine has dug out the judgment of the Beijing court, which sentenced Wong to 14 years in prison for bribery and insider trading 11/2 weeks ago. Detailing part of his crimes, the 65-page document offers some tips about the craft of bribery.

First, go to the top or the officer in charge.

Among Wong's protectors were the Bank of China Beijing branch head who approved the loans; the Ministry of Commerce official who decided whether the listing of Gome was legal; the top antitrust official who ruled if Gome's acquisition was against consumer interest; the police officer who headed the probe into the illegal loan; and the state tax bureau auditor who led the tax-evasion probe against Gome. All were convicted by the court in separate cases, according to Xinhua, although details were not available.

Second, discretion is not necessary.

Find the right middleman, go straight to him and tell him what you want. You don't even have to meet in underground car parks or up in the mountains, but can do it in broad daylight.

That's the case with Xiang Huaizhu, the then deputy director of the Ministry of Public Security's economic crime division. In 2006, he was leading the probe into Wong's unlawful loan. A friend told Xiang that Wong was looking for a meeting regarding the probe. Any investigator would have said no, or insisted on meeting in the office. Instead, the two met in a hotel, where the billionaire asked Xiang to guanzhao (look after) him and to speed up the probe, according to the court record.

In the months to come, Xiang ended his probe with no evidence against Wong. He personally arrived at the Beijing police office to remove a complaint filed against Wong. And he told the Beijing police 'not to waste time' on another insider trading case against one of his firms.

It's the same with Sun Haiting, the leader of the state tax bureau team investigating Gome's taxes. A day after he met Wong in his office in 2006, he got a call from a police friend saying Wong needed some 'advice' on his case. He went to the meeting.

It wasn't at a secret venue but at a Chinese restaurant on the top floor of a five-star hotel, where shark fin and abalone were served at a minimum of 500 yuan (HK$570) per head. The investigation resulted in Gome repaying 67 million yuan in taxes and Wong being fined 2 million yuan. But, as Wong requested, there were no criminal charges and no publicity about the case.

The third tip is to be creative in choosing the pay-off method.

Cash is not always the best, especially when you are talking about millions of yuan in bribes. Wong prefers bank cards. It's simple. Get a nominee to open a bank account, put in some money and you get a piece of plastic with a password. Or you can buy dormant cards from unknown parties online.

They are handy and easy to transfer. Anyone with the card and the password can draw money from the account. When the tax investigation was over, Wong dished out 20 cards, each with 100,000 yuan of stored value, to Sun and two other officials at a dinner, according to the court document. Imagine the trouble if the millions were all in cash.

It's also easy to hide. In 2009, Sun smelled trouble. He cut the bank cards into pieces and flushed them down the toilet. Imagine if he had to burn a million in cash. If you are lucky, you may one day be able to retrieve the money by declaring that the card was lost.

Best of all, the courts did not classify a bank card as a bribe until late 2008. It was argued that a card was not a bribe until one had drawn the money. Even now, it remains legally challenging to trace the money back to the bribe giver.

Wong knew the beauty of this arrangement. In 2006, he handed out 50 million to 60 million yuan in bank cards to send out as 'gifts', his assistant told the court. In spring 2008, bank cards worth 4 million to 5 million yuan were given away.

The fourth tip, treat your protector like a god.

Months after the investigation, Xiang casually mentioned to Wong over dinner that his wife lost a fortune in the stock market. Wong immediately told him that he was about to acquire a listed company and the share price would rocket. Xiang said he had no money to bet. Within days, a buddy of Wong showed up with a box of cash - 1 million yuan - as a loan. He coached Xiang's wife on every step of the bet. The couple later put the money into the listed firm, the court papers said.

Eight months later, Xiang told Wong he was about to move. Then one day, Xiang and his wife turned up at one of Wong's shops and rang up Wong's buddy for 'advice on air conditioners'.

Within minutes, the shop manager showed up with advice on TVs, fridges and so on. To make it a real shopping experience, he even offered a 40 per cent discount and issued invoices.

Of course, when Xiang sent his driver to settle the 61,771 yuan bill, the manager said: 'It's paid.'

Fifth, never take 'no' for an answer.

A day after the 2008 shark fin dinner, during which Wong dished out the bank cards, he got a text message from Sun saying that he was drunk last night and couldn't take the money. Wong ignored it. Sometime later, the two were out for dinner again. Sun quietly slipped the 1 million yuan worth of cards into Wong's jacket. On the way to the car, he told Wong about it.

Instead of acquiescing and bidding Sun farewell, Wong rushed back to the restaurant, grabbed the jacket and ran back to the car park. Sun was still there, as he had expected. 'I was forced to accept,' the officer told the court.

'That's it?' some of you will ask. 'No offshore bank account? No sophisticated money-laundering scheme?'